Reform state government before raising taxes

In their campaigns for governor, Rob McKenna and Jay Inslee both say they would increase state spending on education without raising taxes. This will be difficult, but it can be done.

First, the current governor must drive a hard bargain with state employees.

Gov. Chris Gregoire’s representatives are currently negotiating labor contracts that Inslee or McKenna will have to live with. Negotiators need not give pay increases, because state employees are already set to get them. They will get back a 3 percent cut, and they will be eligible for raises under a new pay step approved in 2011.

In the last negotiations, Gregoire asked that workers’ share of health insurance premiums be increased from 12 percent to 26 percent. She settled for 15 percent. This time, state negotiators should do better. They need to achieve a percentage in the 20s, which is closer to what prevails in the private sector.

The state’s Office of Financial Management has just finished a four-year forecast of revenue and spending. It says that by mid-2015 the state will be more than $1 billion in the hole — if current spending continues.

Some of it should not continue. Private-sector paid employee leave was mandated in law but never funded. The law should be repealed.

Also ripe for repeal is Initiative 732, a mandate that school employees get automatic cost-of-living raises. When the state’s budget is bleeding from a billion-dollar wound, the state should not grant automatic pay raises.

Automatic tax cuts should not continue either. A 0.3-point rise in the tax rate on commercial services, enacted in 2010, is set to expire June 30, 2013. It should be extended.

Much of the state’s budget problem has been the relentless rise in spending on health care. The U.S. Supreme Court’s decision on the Affordable Care Act gives states leverage to demand a federal waiver in rules for Medicaid, a program for which the state pays half. A waiver could allow the state to limit prescribed drugs to a formulary and to charge patients for more expensive medical options, both of which private plans do already.

These actions would go a long way toward meeting the state’s obligations to education.

In a weak economy, the Legislature should ask the people to carry a heavier burden only after all such reasonable reforms are made.